Author: Gordons Mic
Goldman Sachs is moving away from its reputation as a clubby Wall Street syndicate. They announced a new three-pronged organization that integrates investment banking and trading into one entity, asset and funds management into another, and digital capabilities into a third.
A New Move by Goldman
The decision is the latest in a strategy that Goldman’s CEO, David Solomon, has been forthright about: transforming bank’s’ culture and processes into something more efficient and directed toward a future where technology can duplicate traditional banks’ capacity.
“Today, we enter the next phase of our growth, introducing a realignment of our businesses that will enable us to further capitalize on the predominant operating model of One Goldman Sachs as we better serve our clients,” Mr. Solomon said in a news release accompanying the bank’s latest earnings report, referring to an internal initiative that began in 2020 to create a “client-centric organizational structure” Mr. Solomon stated.
Unification of Businesses
Goldman will develop a division that will unite its asset and financial advisory operations and merge the trading and investment banking arm with rivals such as JPMorgan Chase and Morgan Stanley.
The company’s financial services operation, which started under Marcus, will be incorporated into that unit. The bank’s aim may turn to sell those client benefits to employees of major firms that are Goldman’s customers.
Other aspects of Goldman’s consumer products, such as credit card relationships with Apple and General Motors that Marcus formerly oversaw, will now be controlled by a separate business line, Dubbed Platform Solutions. This sector will also contain the cloud-based services that the bank provides to major corporations, such as methods to manage funds and transfer payments around the world faster.
Goldman is Making Big Changes
The modifications made on Tuesday also aim to address Marcus’s erratic path. Though it has been a stable commercial powerhouse for years, Goldman has tried to stay ahead of its rivals by recruiting fresh money from affluent individual clients. Marcus failed to garner the client base its founders anticipated when it started in 2016.
Mr. Solomon indicated to investors that acquiring new users would be substantially cheaper if clients’ colleagues are targeted.
He conceded that the restructuring was a step back from the bank’s apparent previous objective of developing a widely utilized customer service capable of competing with other central retail banks. The individuals in charge of the new business units will mainly remain unchanged.
Employee Performance Review and Income Statement
Goldman’s statement coincided with the release of its third-quarter profits report, which exceeded analysts’ estimates. The bank made little more than $3 billion in profit in the quarter, which was 43 percent less than the same period last year but 5 percent higher than the preceding quarter. On Tuesday, the bank’s stock jumped more than 2%.
Goldman has begun periodically laying off failing employees, which had been put on hold during the early stages of the pandemic. The company is planning to lay off 1 to 5 percent of its workforce based on yearly performance assessments. The bank’s overall headcount increased by 14% in the last year.
Final Words
Mr. Solomon, on the other hand, warned analysts on Tuesday that the short-term economic picture would “remain uncertain.” Many firms looked to be deferring major choices until they could make more robust predictions.